David Swensen, among the most highly regarded money managers in the world after growing Yale’s endowment from $1 billion when he joined as a 31-year-old former grad student of the school to the second-largest school endowment in the country after Harvard, has passed away at age 67. The cause was cancer, which Swensen had been battling since first being diagnosed in 2012.

The news is likely sending shockwaves and sadness throughout endowment offices around the country, largely because so many chief investment officers admired Swensen — who famously pulled the school into non-traditional asset classes like hedge funds, private equity, venture funds, and real estate — but also because many learned from working with him directly.

As a WSJ piece about his death notes, Princeton’s endowment chief for the past 26 years, Andrew Golden, spent five years as a senior associate in Yale’s investment office in the 1980s, yet it helped him form a blueprint for his career. As he told the outlet in 2017, “90% of my good ideas on how to organize the office and develop a culture I’ve stolen from Yale.”

The University of Pennsylvania, Bowdoin College, Wesleyan University and the Massachusetts Institute of Technology have also recruited Swensen protégés over the years. Robert Wallace, who has headed up the Stanford Management Company since 2015, is another former Yale investment manager.

Indeed, in 2015, wealth management recruiter David Barrett told the WSJ that when hiring an investment chief, wealthy universities were interested in more than an Ivy League pedigree. Specifically, he said, their top question was: “Is there anyone at Yale?”

Even as he battled cancer, Swensen was pulling the industry in new directions. In 2018, despite, or because of, extreme volatility in the world of cryptocurrencies, he approved investments in two then-new crypto funds, one the inaugural fund of Andreessen Horowitz and the debut fund of Paradigm, cofounded by the cofounder of Coinbase, Fred Ehrsam, and former Sequoia Capital partner Matt Huang.

In a separate but meaningful decision that’s expected to have lasting impact on the broader industry, Swensen last fall told the firms that manage Yale’s money that they risked losing the school’s backing if they didn’t hire more women and minorities into their ranks — and keep them there.

It was a decision that was years in the making, Swensen suggested, telling the Journal that he’d held off on any kind of systematic effort relating to diversity because he long believed there existed an insufficient pipeline of diverse candidates; he said the Black Lives Matter movement helped him to recognize that far more needed to be done — and that Yale could do nothing or that it could be part of the solution.

 

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